Archive for the ‘pretence’ Category

Lease or licence? Depends on the intention of the parties not the label.

January 21, 2011

There is a lease where the parties agree that there is to be exclusive possession for a term. The Courts will look for the true intention of the parties and will disregard terms of the written agreement (such as a declaration that the agreement is a licence or that occupation will be shared with strangers) where the terms are a pretence and do not reflect the parties’ intention. Where several occupiers each sign a separate licence at different times and on different terms, they are not co-owners of a tenancy.

A.G. Securities v Vaughan and Antoniades v Villiers ([1990] 1 AC 417, HL) were heard together by the English Court of Appeal and the House of Lords. In AG Securities v Vaughan four individuals signed licences entitling them to share a flat with three others introduced by the landlord. There were four rooms in the flat and each person signed a separate licence agreement. The licences were granted at different times and for different licence fees as people came to the flat. The House of Lords held that the terms of the licence and the self-description as a licence accurately reflected the parties’ intentions. By contrast, it would require a high degree of artificiality and do violence to the parties’ intentions and expectations if the four agreements were to be construed (as the majority of the Court of Appeal had construed them) as a single, co-owned tenancy.

In Antoniades v Villiers the occupiers were a co-habiting man and woman. They had signed separate licences at the same time but it was clear to all of the parties that they were a couple. The terms in the agreements describing themselves as licences and allowing the owner of the property to share occupation or introduce additional occupiers were a pretence and did not reflect the true intention of the parties. Lord Templeman pointed to the following factors as indicators that despite what purported to be two separate licence agreements there was in reality just one co-owned tenancy: (1) the couple applied jointly and sought exclusive occupation; (2) the landlord allowed the couple to enjoy exclusive occupation and accepted rent; (3) the landlord’s power to share the property and allow others to do so was inconsistent with the Rent Acts; and (4) the power to deprive the occupants of exclusive occupation was a pretence (at 465). This was a lease.